So much has changed in how we live and work since the US housing system was built.

For many people, their definitions of “home” are starting to change too. A single family home owned by a married couple is the dominant form of household, and it will so. But we’re seeing a richer variety of household types emerge.

A new generation of entrepreneurial homeowners are beginning to customize homeownership so that it better fits their lifestyle and their financial goals. As we explain below, they’re doing so by sharing homes, or they’re dividing space or time in homes. They’re also assigning units in multi-family structures to different owners. Or they’re building multi-structure properties on a single lot.

Some of these non-traditional household types are responses to the housing affordability crisis, like house-hacking or co-buying a home with friends or family. Others, like multi-generational households, are a response to the growing need for care in our society (childcare, elder care, etc.). Still others are responses to digital nomadism and a growing trend towards community-based forms of ownership, like co-living or arrangements.

Each of these models comes with increased complexity both in buying and owning the property. But if you think looking outside of the “single family home” is the path for you, that’s what we’re here to help you do.

Is it right for me?

Non-traditional forms of homeownership, like co-owned or multi-unit properties, come in a near infinite variety of shapes and sizes. But at a high level, we can group them into the following categories.

• Owning an entire residence with an unmarried partner - This is the most common category. It can include unmarried romantic partners deciding that they don’t need to “wait until they’re married” to become homeowners. Or even roommates deciding to co-own instead of renting as a way of getting on the housing ladder earlier in life.
• Dividing space in a single family home (SFH) - From NYC’s classic brownstones to San Francisco’s colorful Victorians, the older classic homes in many expensive urban areas were built for a time when people had a staff or larger families. Sometimes these can be formally sub-divided into condos, but that’s not always possible or desirable. Here are some ways that modern owners are dividing space in SFHs:
  • Renting a room in the home to offset part of the monthly expense. House hackers rent rooms in all sorts of SFHs as a way of making their mortgage more affordable.
  • Some owners are setting up separate but connected spaces in a SFH with another family, a friend, or a sibling.
  • Pioneering owners are forming co-living communities where multiple individuals and families co-live within large SFHs and have assigned common and assigned private spaces
• Buying a multi-family property - Housing structures with up to four units are considered multi-family residential (five or more is considered multi-family commercial). Some enterprising owners are buying 2-4 unit multi-family properties and splitting the living units with friends or family to create community or improve caregiving for children or elders. Other are renting out the units they don’t plan to occupy themselves and using the income to pay a portion of the mortgage. In fact, income from non-occupied units of 2-4 unit properties can be used as income to qualify for the mortgage needed to buy the property.
• Multiple structures on one plot - Some ambitious owners are buying or building properties with multiple separate structures or dwelling units on them and then assigning ownership of particular structures to different individuals or families. More and more, we’re seeing groups employing this strategy to break the isolation of living alone. For the record number of retired people, this can be an alternative to living alone or living in a planned community. And for groups of families or single parents, this setup can transform the childcare model.
  • Building an “ADU” - California has led the nation in a rapid shift to allow homeowners to build an Accessory Dwelling Unit (ADU) on an existing property in an effort to improve housing availability. These can range from a simple home office all the way up to a small 3-bedroom. Constructing an ADU can be a way to generate a rental income stream or have an extra independent living space for grandparents.

How would this work financially?

The good news is that there are a variety of mortgage financing options for these use cases. Given that these purchases are generally more expensive or complex a single family buying a single family home, it is good to think through how to make the finances work. Here are a few levers to consider:

1. Getting a mortgage - The form of ownership you select has implications for the types of mortgages that will work - and those that won’t. If your considering a co-owned or multi-unit property, it’s a smart idea to start working with a qualified mortgage professional to review the best mortgage products for your purchase. Depending on your particular situation, a basic conventional mortgage loan might be the right choice. While for others, an investor loan or an a construction or renovation loan could be good options to explore.
2. Ownership Splits - If you’re considering co-buying a getaway home, a key considerations is to align around the ownership split. The most common way is to divide the property equally among the owners. But it doesn’t have to be this way. Some owners may have different financial situations - some with more cash for a down payment and others may have a stable income but less upfront cash. In scenarios where owners are splitting time in the property, opportunities for usage might not be equal, so some owners might want to align their investment with their expected usage. Stuga can make sure you are set up divide your property in the way that best suits you, and if the situation changes down the road we will be here to help you make the adjustments you need.
3. Rent one or more of the units - As mentioned previously, if you have the intention to live in part of the property and be a “live-in landlord”, you can actually use the expected rent you will generate from other dwelling units on the property to qualify for the loan needed to buy it. However, it can be a challenge to figure out the estimated rental revenue. And if you are searching for a new home with the expectation of renting out a dwelling unit on the property, your assumptions will need change with each property based on the expected rent. Stuga can help you model this out, get local data insights, and find the right lender.
4. Get a co-investor - For multi-unit or multi-family properties, one way to help afford the property would be to get the help of someone else that is not planning on sharing the space with you. Perhaps a co-owner who’s willing to invest would be open to helping you with the down payment in exchange for some of the downstream rent. With the right legal structure (discussed below), it’s possible to turn your property into a business.
5. Use a gift - Using gift funds from parents or loved ones to purchase a home is a growing trend that is often misunderstood. Many feel that you need to do this in a clandestine way or risk not being approved, or that it will incur a tax penalty. The fact of the matter is, as long as its truly a gift, and its properly documented, it’s not generally an issue for most buyers.

At Stuga we specialize in these unique ownership scenarios. If you have a use case you want to run by us, advisors at Stuga are always available to answer questions about which mortgage product or ownership structure would work best.

What else should I be thinking about?

Beyond how to afford the property here are a few topics worth considering that make sure you end up with the right type of property in the long term.

1. Structure it the right way: If part of your plans includes owning with a partner - an unmarried romantic partner, friends or family, business partner, etc., - you’ll want to pay especially close attention to how the owners will hold title to the property (e.g., tenancy-in-common vs. Limited Liability Company). You’ll also want to develop a well-crafted co-ownership agreement. At its most basic level, a co-ownership agreement describes how the property will be owned, operated, and exited. Stuga’s platform allows you to generate a templated, but customized, co-ownership agreement specific to how you want to own and who you want to own with.
2. Construction and renovations: Some of the strategies mentioned above will require renovations to existing structures or construction of new ones. Knowing whether this is something you are open to will help guide your search. If you are considering significant build or renovation project, you can read more in our companion guide, New Builds & Renos.
3. Taxes: Taking advantage of the tax benefits for homeownership is pretty straightforward for primary residences owned by married couples or individuals. But if you’re co-owning a home, or sharing a unit in a multi-family home, or renting out a dwelling unit on a multi-structure property, things are a little more complicated. Common homeownership tax deductions, like the mortgage interest deduction, can be split among owners. And if you’re renting a unit, or holding title to the property in an LLC, you have a wider range of available tax deductions but a wide range of bookkeeping and tax forms to manage. It’s all quite manageable, but it’ll be important to consult a qualified tax professional to make sure you.

How can Stuga help me? And what will it cost?

If you think that you want to purchase a multi-unit property Stuga can guide you every step of the way and better yet, it doesn’t cost more than do it yourself. On top of helping you find the best mortgage for your purchase, we will also set you up with a the right legal agreements and provide you with useful insights throughout you home search. To get started simply set up a Profile where you tell us about the type of home your looking for, you can also save actual listings and share them with your potential co-owners. Then when you are ready simply schedule a time with you home finance advisor through the portal or reach out over text/chat to get kick off your journey.